You are browsing the archive for 2018 December 05.

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Why Are People Poor?

December 5, 2018 in Economics

By Michael D. Tanner

Michael D. Tanner

Why are people poor? Conservatives and liberals offer very
different explanations.

Conservatives point to a “culture of poverty” and
suggest that much deprivation is the result of flawed choices and
behavior by the poor themselves. They point to a strong correlation
between poverty and a failure to follow the so-called
“success sequence”: finish school, get a job, get
married, and only then have children. Relatively few people who do
those things end up in poverty.

An anti-poverty agenda
built on empowering poor people and allowing them to take greater
control of their own lives offers the chance for a new bipartisan
consensus that rejects the current paternalism of both Left and
Right.

Liberals, on the other hand, say that that is all very well, but
choices are always constrained by the circumstances in which people
live. Therefore, conservatives are wrong to discount structural
factors, such as racism, gender-based discrimination, and economic
dislocation, that can help shape people’s choices.

There is truth to both explanations. One can’t strip the
poor of agency by treating them as if they were little more than
chaff blown by the wind, with no responsibility for their choices.
But neither should we ignore the context in which those decisions
are made. For all the progress we have made, not everyone starts
with an equal opportunity.

However, in my new book, The Inclusive Economy: How to Bring
Wealth America’s Poor
(available this Friday, December
7), I offer a third explanation: Too often, government policies
help make or keep people poor. Rather than having another sterile
debate over whether this program should be increased by $X billion
or that program should be cut by $Y billion, we should strive for
fundamental reform of those areas of government that most harm the
poor:

Criminal Justice: Scholars at Vanderbilt
University have estimated that overcriminalization and the bias
against the poor and people of color in our criminal-justice system
have increased poverty rates by as much as 20 percent. Another
study found that a family’s probability of being poor is 40 percent
greater if the father is imprisoned. Given that 5 million children
have an imprisoned parent, that is an enormous contributor to
poverty in America.

As President Obama’s Council of Economic Advisers pointed out in
2016:

Having a criminal record or history of incarceration is a
barrier to success in the labor market, and limited employment or
depressed wages can stifle an individual’s ability to become
self-sufficient… . Further, criminal sanctions create financial
and emotional stresses that destabilize marriages and have adverse
consequences for children.

In addition, conservatives who warn about the dangers of
nonmarital births should take note of research by Harvard’s William
Julius …read more

Source: OP-EDS

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How House Democrats Can Fix the North American Trade Deal

December 5, 2018 in Economics

By Simon Lester, Inu Manak

Simon Lester and Inu Manak

Donald Trump has thrown down a trade gauntlet to the Democrats
who will take control of the House of Representatives in January.
The day after the Nov. 30 signing of a new deal with Mexico and
Canada, the U.S. president announced that he planned to formally terminate the existing North
American Free Trade Agreement (NAFTA) “shortly.”
Assuming he has the power to terminate (which is debatable), that would give the U.S. Congress
six months from the date of termination to approve the new deal
known as the United States-Mexico-Canada Agreement — or
return to the pre-NAFTA rules in effect before 1994.

With their midterm election takeover of the House of
Representatives, the Democrats will have a much bigger voice on
trade policy. They seem certain to use that voice to push for
substantive changes, such as stronger labor protections, in order
to move the USMCA in what they see as a more “progressive”
direction. Conservatives would obviously prefer an agreement that
is less progressive. But people on both sides of the aisle have a
common interest: making the agreement enforceable and making it function
properly.

Beyond any progressive
tweaks, the House Democrats should demand that the administration
make changes to the broader procedural and structural provisions of
the USMCA to ensure that it can be enforced and updated when
needed.

As it stands now, the USMCA text has flaws in both areas. Beyond
any progressive tweaks, the House Democrats should demand that the
administration make changes to the broader procedural and
structural provisions of the USMCA to ensure that it can be
enforced and updated when needed.

NAFTA was a success for the most part, but one major problem
arose with the settlement of disputes between the parties. In
2000-2001, the United States blocked a dispute panel — a
third-party adjudicator that interprets and applies NAFTA
obligations to determine if a government is in violation —
from being appointed to hear a Mexican complaint about U.S. sugar
restrictions. After this episode, no new panels were set up.
Unfortunately, the flaws that allowed the United States to block
that panel were largely carried over from the NAFTA to the USMCA.
If enforcing the agreement is important to the Democrats, they need
to address this flaw.

The main problem was that, as part of the panel appointment
process, all three countries needed to agree on a list of potential
panelists to choose from. However, because the roster of panelists
expired every three years, it would often remain empty or
underfilled, as the three countries could not always agree on who
should serve. …read more

Source: OP-EDS